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Post by oracle75 on Nov 16, 2022 23:12:10 GMT
It seems to work for a large majority of EU countries. Greece has benefitted from the Euro and likewise, most countries would be bankrupt if they reverted back to their own currencies which would be worth very little in global trading. The Euro has the confidence of huge financial institutions and countries can rely on that if they need to. And imagine if each country had its own currency while manufacturing and trading across multiple borders. The cost and profit sums would be impossible to calculate as currency rates change between each other. And in which currency would a country export? A rising tide lifts all boats. The Euro is stable and respected. It represents one of the top three global economies in the world. I doubt any national European currency can do better. I think that's the most ignorant post I've ever read on any forum. Greece is bankrupt and will never pay off its debt. The Eurozone was hit very hard by the banking crisis in 2007/8 - much harder than the UK - and the EU/ECB refused to resort to QE until it was too late. So the Greek GDP halved over the following years and is still half what it was in real terms. Many businesses went under and the suicide rate went up a lot. It's a basket case now and there's no way it can pay off its debt because the interest rate is too high. As for having the confidence of "huge financial institutions" the only body (apart from the ECB/ESM) who would lend them money was the IMF - which is strictly against its own remit. The IMF was not set up to bail out currencies - just countries. And it must only do it if it has confidence that the loan can be repaid. They lent money to Greece at a very high interest rate. Most of Greece's loans came from the ECB. These debts have not been paid off and never will be. The problem with a lot of disparate countries sharing the same currency is that they all tend to have their own natural interest rate. Greece worked fine with the drachma but they never balanced their books and they had to pay high rates of interest for their borrowing. But their currency depreciated a lot anyway so their loans also depreciated. When they joined the euro they adopted a currency which was more stable and therefore had lower interest rates. But the Greeks just carried on as before - in fact they borrowed more because the interest rates were lower So when the banking crisis hit they were screwed. The UK also had a run-in with the euro when we joined the ERM - look it up. We had a natural interest rate far higher than the euro but we lowered it when we joined the ERM. You can read for yourself what happened. We got out and recovered very quickly, Greece can't do that. They have no way out and nor do any of the poorer countries who relied on borrowing. The bottom line is that Germany runs the ECB and the euro is the "new Deutschmark". It allows Germany to trade with a currency that is about 20% undervalued - so it can dump cheap BMWs and VWs etc on countries and their native manufacturers can't compete. It's called dumping - and China does it too. Unfortunately for Germany to trade with an undervalued currency many other countries (most) have to trade with an over-valued currency - no free lunches in finance. It's reckoned that Greece would have to devalue its currency by over 40% to become competitive. But of course it can't because it's in the euro. They're screwed - alomg with many other eurozone countries. Why do so few people get this? It's not complicated. Once again I wrote about the value of a single currency, not the economic status of the Greek economy. And I would appreciate it if you didn't insult me when I made a point you didn't even address. |
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Post by oracle75 on Nov 16, 2022 23:22:07 GMT
Because China is a low-cost manufacturer, I suppose. They sell junk at low prices. You do understand the simple logic of having one standard for all, don't you? How can a small to medium size business selling, say, wine in France, afford to investigate the laws surrounding selling, labelling, etc., in 27 different countries? It just wouldn't be feasible. If there are 27 different standards, that company will be restricted to sales in France or maybe another couple of countries. It's unlikely to be able to afford the legal fees involved in investigating 27 different markets. But standardise those rules across Europe, and suddenly a massive market opens up to that company. China is the worlds largest producer of cars. They export these cars to every corner of the globe - yet, strangely enough, they share their domestic standards with hardly any of them. Meanwhile in the EU - with their harmonised standards - car production has not grown in over 3 decades.. Are you sure that harmonised standards are the solution? China produces cars for its domestic market and around the Far East. It is not even in the top 15 vehicle exporters. en.m.wikipedia.org/wiki/List_of_countries_by_car_exports |
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Post by oracle75 on Nov 16, 2022 23:31:01 GMT
It seems to work for a large majority of EU countries. Greece has benefitted from the Euro and likewise, most countries would be bankrupt if they reverted back to their own currencies which would be worth very little in global trading. The Euro has the confidence of huge financial institutions and countries can rely on that if they need to. And imagine if each country had its own currency while manufacturing and trading across multiple borders. The cost and profit sums would be impossible to calculate as currency rates change between each other. And in which currency would a country export? A rising tide lifts all boats. The Euro is stable and respected. It represents one of the top three global economies in the world. I doubt any national European currency can do better. Greece has been bankrupt for years using the euro; watch this: www.youtube.com/watch?v=94UcyJnRcGUGreece would be bankrupt in any currency. No one used to pay their taxes. Money was exchanged for favours. At least today there is some oversight. |
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Post by Einhorn on Nov 17, 2022 1:14:14 GMT
 Look Vinny you're an intelligent person Link? |
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Post by Red Rackham on Nov 17, 2022 3:06:13 GMT
Look Vinny you're an intelligent person Link? LOL. |
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Post by Pacifico on Nov 17, 2022 7:52:39 GMT
China is the worlds largest producer of cars. They export these cars to every corner of the globe - yet, strangely enough, they share their domestic standards with hardly any of them. Meanwhile in the EU - with their harmonised standards - car production has not grown in over 3 decades.. Are you sure that harmonised standards are the solution? China produces cars for its domestic market and around the Far East. It is not even in the top 15 vehicle exporters. en.m.wikipedia.org/wiki/List_of_countries_by_car_exportsChinese cars are flooding into Europe - Teslas, MG's, Polestars, BMW's etc etc. - how is this happening when their domestic standards are not aligned with Europes? |
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Post by Pacifico on Nov 17, 2022 7:55:40 GMT
China is the worlds largest producer of cars. They export these cars to every corner of the globe - yet, strangely enough, they share their domestic standards with hardly any of them. I'm pretty sure China's success comes from it being a low-cost producer, Doc. Don't you have any more realistic comparators? A small to medium-sized wine producer in France is not the same as a large Chinese car manufacturer, either. Wherever I have gone in the world it has been possible to get French wine in a restaurant - how is that achievable without harmonised standards?. |
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Post by Toreador on Nov 17, 2022 7:56:45 GMT
Look Vinny you're an intelligent person Link? Evident in that Vinny doesn't engage with you. |
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Post by steppenwolf on Nov 17, 2022 8:01:48 GMT
Oracle75 wrote "Once again I wrote about the value of a single currency, not the economic status of the Greek economy. And I would appreciate it if you didn't insult me when I made a point you didn't even address."
Actually I did address the problem of the single currency - and many economists have written about the problems. I even gave you a textbook example of what happens when a country tries to "fix" an exchange rate - i.e. when we joined the ERM. John Major was a great EUphile and (against the advice of Thatcher) took us into the ERM where we had to keep the pound in a fixed range relative to the Deutschmark. But we're a very different country from Germany and we couldn't do it. We finally gave up the struggle when interest rates hit 15% and Sterling was still going down because it was overvalued. It caused a recession. Read about it. We then left the ERM and dropped interest rates and the pound floated down and the recession quickly ended.
The difference with the euro is that countries can't get out - not without great difficulty anyway. So countries like Greece are trying to live with a very overvalued currency and the inevitable result is that they go into recession. The only way this can be solved is for the richer countries to move money to the poorer countries, but they refuse to do that. Of course Germany is doing very well because it's trading with a currency that's about 20% undervalued - a bit like China is. It's called "dumping".
Your idea that it makes trade easier is very naive.
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Post by oracle75 on Nov 17, 2022 8:03:37 GMT
Chinese cars are flooding into Europe - Teslas, MG's, Polestars, BMW's etc etc. - how is this happening when their domestic standards are not aligned with Europes? Your link clearly says "could be imported into Europe". Which implies it is not currently the case. To import into Europe China would have to meet European standards and compliance. How they do that is their problem. |
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Post by Pacifico on Nov 17, 2022 8:12:11 GMT
Your link clearly says "could be imported into Europe". Which implies it is not currently the case. To import into Europe China would have to meet European standards and compliance.How they do that is their problem. Exactly - to be able to export to another country all you have to do is ensure that the products meet the requirements of that country - you certainly don't need to tailor your own domestic regulations to be the same as that country. Chinese cars will take a large slice of the European market just as Japanese manufacturers did in the 1970's - it's inevitable. Especially with European manufacturers finding it increasing uneconomic to make cheap cars. |
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Post by oracle75 on Nov 17, 2022 8:12:17 GMT
Oracle75 wrote "Once again I wrote about the value of a single currency, not the economic status of the Greek economy. And I would appreciate it if you didn't insult me when I made a point you didn't even address." Actually I did address the problem of the single currency - and many economists have written about the problems. I even gave you a textbook example of what happens when a country tries to "fix" an exchange rate - i.e. when we joined the ERM. John Major was a great EUphile and (against the advice of Thatcher) took us into the ERM where we had to keep the pound in a fixed range relative to the Deutschmark. But we're a very different country from Germany and we couldn't do it. We finally gave up the struggle when interest rates hit 15% and Sterling was still going down because it was overvalued. It caused a recession. Read about it. We then left the ERM and dropped interest rates and the pound floated down and the recession quickly ended. The difference with the euro is that countries can't get out - not without great difficulty anyway. So countries like Greece are trying to live with a very overvalued currency and the inevitable result is that they go into recession. The only way this can be solved is for the richer countries to move money to the poorer countries, but they refuse to do that. Of course Germany is doing very well because it's trading with a currency that's about 20% undervalued - a bit like China is. It's called "dumping". Your idea that it makes trade easier is very naive. This is a very old argument that is wearing thin. Poorer countries are free to run their economies as they see fit. As are all member states. My point was if they tried to use their own currency they would face enormous economic threats against the strength of the yuan and the dollar. The value of the currency would be on the floor and inflation would be rampant. It is the euro which is supporting their economies. As I said, the EU never promised economic parity. It merely promised a huge market and a strong currency. Which it has. |
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Post by oracle75 on Nov 17, 2022 8:18:47 GMT
Your link clearly says "could be imported into Europe". Which implies it is not currently the case. To import into Europe China would have to meet European standards and compliance.How they do that is their problem. Exactly - to be able to export to another country all you have to do is ensure that the products meet the requirements of that country - you certainly don't need to tailor your own domestic regulations to be the same as that country. Chinese cars will take a large slice of the European market just as Japanese manufacturers did in the 1970's - it's inevitable. Especially with European manufacturers finding it increasing uneconomic to make cheap cars. And? It is just another example of Chinese inevitable dominance. If history speaks, there will be various mergers and acquisitions across the sector. To be honest, I don't care. I'll be dead. I have more important things to worry about. This is for another generation. And if Europe declines and Chinese control grows, it will be for Europe in the future to decide what to do about it. |
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Post by steppenwolf on Nov 17, 2022 8:30:06 GMT
So why is China the worlds leading manufacturer? What single markets does China belong to? Because China is a low-cost manufacturer, I suppose. They sell junk at low prices. You do understand the simple logic of having one standard for all, don't you? How can a small to medium size business selling, say, wine in France, afford to investigate the laws surrounding selling, labelling, etc., in 27 different countries? It just wouldn't be feasible. If there are 27 different standards, that company will be restricted to sales in France or maybe another couple of countries. It's unlikely to be able to afford the legal fees involved in investigating 27 different markets. But standardise those rules across Europe, and suddenly a massive market opens up to that company. You and Nigel don't like that idea, though, do you? That means giving up 'sovereignty', having a standard law imposed from outside Parliament. Let's see how well your ideas about sovereignty age. China was a low cost manufacturer but nowadays it makes products in all price ranges, including some very high quality stuff. You should have a look at some of the guitars they're making now - they bear comparison with the best in the world. They're cheaper because China has a monetary policy to keep the yuan pegged at a low rate relative to the dollar. It's called dumping. It's like what Germany does courtesy of the EU. Your point about having common standards is fair enough up to a point. It makes sense to have common standards for some items certainly (e.g. cars). However, that was never the problem we had with the EU's rules. The problem was that the EU decrees that ALL businesses in the countries that are EU members must obey EU rules on all regulated products. And that applies to the 90% of UK companies who don't trade with the EU too. It's not about "sovereignty. No country would object to the EU saying that any product that we export to the EU must be to EU standards. I think we should also apply the same requirement to goods that countries export to the UK - though we often don't. Can you imagine that the USA would agree to the same deal in order to trade with the EU? They would laugh. |
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Post by steppenwolf on Nov 17, 2022 9:12:29 GMT
Oracle75 wrote "Once again I wrote about the value of a single currency, not the economic status of the Greek economy. And I would appreciate it if you didn't insult me when I made a point you didn't even address." Actually I did address the problem of the single currency - and many economists have written about the problems. I even gave you a textbook example of what happens when a country tries to "fix" an exchange rate - i.e. when we joined the ERM. John Major was a great EUphile and (against the advice of Thatcher) took us into the ERM where we had to keep the pound in a fixed range relative to the Deutschmark. But we're a very different country from Germany and we couldn't do it. We finally gave up the struggle when interest rates hit 15% and Sterling was still going down because it was overvalued. It caused a recession. Read about it. We then left the ERM and dropped interest rates and the pound floated down and the recession quickly ended. The difference with the euro is that countries can't get out - not without great difficulty anyway. So countries like Greece are trying to live with a very overvalued currency and the inevitable result is that they go into recession. The only way this can be solved is for the richer countries to move money to the poorer countries, but they refuse to do that. Of course Germany is doing very well because it's trading with a currency that's about 20% undervalued - a bit like China is. It's called "dumping". Your idea that it makes trade easier is very naive. This is a very old argument that is wearing thin. Poorer countries are free to run their economies as they see fit. As are all member states. My point was if they tried to use their own currency they would face enormous economic threats against the strength of the yuan and the dollar. The value of the currency would be on the floor and inflation would be rampant. It is the euro which is supporting their economies.As I said, the EU never promised economic parity. It merely promised a huge market and a strong currency. Which it has. Utter nonsense. Still, I suppose it's no surprise that people who support the EU have no understanding of economics. Greece (and all countries in the Eurozone) have no control of their currency which removes most of the levers that can be used to regulate the economy. They can't devalue the euro. So Greece are trading with a very overvalued currency which has caused a massive recession. Their GDP has halved from 2008. They can't use QE like we did when we hit trouble. And they could only borrow from the ECB/ESM (and briefly from the IMF) and the EU imposed austerity conditions on Greece and very high interest rates - so they're in a debt trap. Contrast that with the UK. We had problems in 2008 also but we printed money and slashed interest rates. We had very low unemployment rates and very few businesses went bust. And inflation also remained low (surprisngly). Sterling declined of course but that helped recovery. If you look at Greece they lost a large number of businesses, unemployment ballooned and they're in a debt spiral from which they will never emerge - unless the EU write off their debts, Which they should do since the EU has caused their debts by the way they handled the 2008 bust. Which approach do you prefer? Accepting that you're in a hole, like we did, and effectively devaluing our currency. Or refusing to accept that you're in a hole and carry on as before and bankrupting the country. That's what happened to Greece because they had literally no way out. The single currency did NOT "support their economies" - it put them in a straitjacket. Do you EUphiles ever LEARN from history? |
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